Crypto - Buying Coins In Their Infancy as a Strategy

[Jon]

Until you are confronted with the decisions in real time, it is hard to appreciate how difficult the decisions are. Beforehand, it all seems so simple: buy low, sell high. But when you actually do it, what is high? High might be a price that is lower than you originally bought the investment for.

 

[Cronk]

Smart (successful) traders don't make decisions in real time. They have a trading plan and refine/check it by back testing. For example, having bought something, they will set up a sell order based on a trailing stop and maybe a second order to sell if the price has risen 50% or 100%

 

[Isaac]

Smart (successful) traders don't make decisions in real time. They have a trading plan and refine/check it by back testing. For example, having bought something, they will set up a sell order based on a trailing stop and maybe a second order to sell if the price has risen 50% or 100%

Most of the time, though, isn't that decision based on a formula that's based on historical things? Couldn't really be applied to a brand new coin first in existence?

 

[Jon]

They have a trading plan and refine/check it by back testing.

Whether it is live or not, you still have to make the same decisions. You are just doing it in advance. Also, the Efficient Market Hyopthesis has a thing or two to say about back testing. The value of the asset is already factored into the market price when you buy it.

I'm not saying there is no value in either, just that they are not perhaps as influential as you might anticipate. There are plenty of trading strategies, and people know about them. EMH suggests that these are all known, and so it is hard to profit from them because everybody is already trying it and that already alters the price before you buy. Hope that makes sense!